THE Climate Change Bill was published in parliament this month, bringing with it rigorous targets for carbon emissions, and an emission trading scheme for organisations that spend more than £500,000 a year on energy.
The scheme, known as the Carbon Reduction Commitment (CRC), will affect landlords whose responsibilities include paying energy bills then collecting money from tenants. They will have to ensure tenants reduce their energy consumption to hit the overall targets.
In cases where the tenants do not pay the electricity bill directly and are part of a CRC organisation, and the landlord is in a separate CRC organisation, the government suggests that compliance with the scheme can be handed over from the landlord to the tenant if they both agree to the arrangement.
The government estimates that the scheme will result in an emissions reduction of around half a million tonnes of carbon per year by 2015, rising to 1.2million tonnes per year by 2020. Putting the CRC in place may be difficult to implement for some landlords. There are likely to be severe penalties for those who do not comply, however, or who report false data. The Carbon Reduction Commitment, which was announced in the Energy White Paper published on May 23 this year is due to come into force in January 2010.
The organisations that will come within the sphere of the CRC include large retailers, hospitals, universities, local authorities, hotel chains, multiplex cinemas, large office-based organisations, light industry and government departments. Other climate change regulations that came into force last year dramatically tightened the time within which the building industry can comply with energy-efficiency targets.
Under the International Kyoto Protocol and European Union agreements, by 2008-2012 the UK must reduce its 1990 baseline emission of six greenhouse gases by 12.5%.
The new ‘Part L’ of the buildings regulations mean new homes will need to be better insulated and make use of more efficient heating systems. They make it compulsory to test for air pressure leakage in buildings, which can reduce the energy efficiency of buildings. All new buildings had to comply with the new Part L building regulations from April 6, 2006. The transitional provisions for developers who had building plans approved before then ended on April 1 this year.
Taken alongside changes to condensing boilers, the new measures are expected to deliver 27% better energy efficiency for commercial buildings, 22% in houses and 18% in flats. On average the increase in energy efficiency in dwellings will be 20%.
The building regulations focus particularly on insulation, the efficiency of boilers and heating/cooling installations, lighting and glazing.
The British Property Federation fears that landlords will be ‘buried in red tape’ with the introduction of the Carbon Reduction Commitment. Taken with the existing Energy Performance of Buildings Directive, the property industry has little choice but to take the Climate Change Bill very seriously from inception.
Richard Freeman-Wallace is head of property at Watson Burton LLP.